Rising powers session Is China displacing traditional aid donors and practices in Africa? What are the realities of China s engagement in Africa? Residential School on Governance and Development CARLOS OYA Development Studies, SOAS, University of London Email: co2@soas.ac.uk Kigali, 26 th April 2018
There is a lot of interest Media reporting booming in past 10 years, particularly focused on certain countries (Sudan, Angola, Ethiopia, DRC ) International media African media Chinese media Questions in class! Especially when teaching on development aid the next big thing Requests for events / seminars 2
Academics catching up Google scholar hits for China AND Africa in title: 152 hits in 1985-2000 (many not directly relevant) 2,360 hits 2001-2015 Google web search: well over 200,000 hits since 2001 and a dedicated Wiki page https://en.wikipedia.org/wiki/africa%e2%80%93c hina_relations From Alden 2005, a series of important books published and many well-known authors (Brautigam, Taylor, Corkin, Cheru, Mohan ) 3
Politicians reacting Obama 2015: China has been able to funnel an awful lot of money into Africa, basically in exchange for raw materials that are being extracted from Africa. Tillerson 2018: Oftentimes, the financing models are structured in a way that the country, when it gets into trouble financially, loses control of its own infrastructure or its own resources through default. African nations should not forfeit any elements of your sovereignty as you enter into such arrangements with China Reflecting a common (biased) narrative China now provides as much, if not more, aid to Africa as the United States. Much of this aid goes to corrupt and authoritarian regimes. Beijing s main goal is to buy the loyalty of Africa s governing elites and secure access to the continent s rich natural resources. "Africa wants to be treated as an equal, and this is what many Western countries do not understand, or are at least are not willing to do China at least knows that we have to treat people in Africa as equals" Zhong Jianhua, China's special envoy to Africa, 2014. 4
Clash of narratives 5
The growing business of debunking myths 6
Chinese aid as a threat to the traditional aid establishment? 7
Some basic premises Uncertainty in data Aid flows often inflated as ODA, OOF and FDI frequently conflated Lack of centralised source of data Reliance on inaccurate media reporting 8
How significant is Chinese aid? 9
The relative magnitude of Chinese aid to SSA: not so large Net Development Aid to Africa in US$ billion: 2000-2013 250 200 150 100 China USA OECD total 50 0 2000-05 2005-13 Chinese aid: $1.4bn in 2007; $1.8bn in 2008; $2.6bn in 2012 and $3.2bn in 2013 (Brautigam) Source: own elaboration from DAC database and Brautigam (2009) and http://www.chinaafricarealstory.com/p/chinese-aid.html 10
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Overseas official loans: much in commercial terms 12
Non-DAC donors are not a new phenomenon 120,000 Aid disbursements by category of donor: constant 2011 million US$ 100,000 80,000 60,000 40,000 20,000-1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 DAC Countries Total Non-DAC Countries, Total Multilateral, Total 13
Are these flows enough to affect bargaining power of OECD donors? 14
Some facts about its distribution, destinations and implications 15
Determinants of Chinese ODA (Dreher et al. 2016) ODA flows are closely linked to foreign policy interests (UN General Assembly voting and One-China policy) Contrary to the rogue donor aid not following resource acquisition in poorly governed countries Not disproportionately going to authoritarian or more corrupt countries Chinese ODA flows are strongly oriented towards poorer countries 16
https://www.washingtonpost.com/blogs/monkey-cage/wp/2015/10/20/many-in-the-west-fear-chinese-aid-to-africa-theyre-wrong-heres-why/ 17
https://www.foreignaffairs.com/infographics/2015-10-15/china-not-rogue-donor 18
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The Angola package : undermining good governance? 20
A key difference is sector allocation: what priorities? 21
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Perceived comparative advantage Who among the following partners are typically most effective at meeting the development objectives of the country? Source: http://www.voxeu.org/index.php?q=node/6741 and African Economic Outlook 2011 p. 109 25
In sum, what s really different in then nature and dynamic of Chinese aid to Africa? No policy strings policy space not directly threatened Focus on basic infrastructure and investment projects with long maturity Less bureaucracy and transaction costs more costeffective and faster delivery Aid tying? Yes, but still cost-effective and aid tying continues among OECD donors Aid to rogue states? Not really, all sorts of recipients Promoting a Beijing consensus? Not yet and no interest from China but interventions have a potential to create conditions for industrial development note new focus of One Belt One Road 26
What about FDI? 27
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Africa focus? 29
Chinese FDI and COPs in SSA 2000-2013 (current USD) 45,000,000,000 40,000,000,000 35,000,000,000 30,000,000,000 25,000,000,000 20,000,000,000 15,000,000,000 10,000,000,000 5,000,000,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 COPs SSA total Chinese FDI flows SSA total Chinese FDI stocks SSA total Source: China Statistical Yearbook (various years) and Statistical Bulletin of China's Outward FDI 30
http://www.europeanfinancialreview.com/?p=6110 31
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Scramble for natural resources? Shen 2015 33
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Possible opportunities in current context Improvements in infrastructure (transport, energy) viability of industrial investments Production shifting location from Asia (China, Southeast Asia, South Asia) and Middle East (Turkey, Egypt) logic of relocation and expansion in global production networks Domestic demand growing in Asia Industrial policies in some countries (Ethiopia) Linkages between construction and manufacturing 35